Oil surge will cause bitcoin to crash, now what

Bitcoin falls back below $66,000 due to shock from energy markets. The rise in oil is reviving inflationary pressures and changing the cards of monetary expectations. This movement is reminiscent of a now well-established reality: cryptocurrencies evolve in close correlation with macroeconomic dynamics. In this context, investors adjust their exposure to a more uncertain environment.

Oil triggers global inflationary shock

Bitcoin’s decline comes at a time of extreme tension in energy markets. Iran’s closure of the Strait of Hormuz caused a rapid rise in oil prices, which directly fueled inflationary expectations.

So this dynamic is “objectively unsustainable”a term reflecting the magnitude of the perceived shock to the US economy. This situation immediately hit the financial markets with a sharp rise in US bond yields, especially the 10-year.

Several key elements explain this chain reaction in the markets:

• A surge in oil prices coupled with geopolitical tensions;
• Accelerating inflation expectations in the United States;
• Strong rise in bond yields;
• Revision of Fed Monetary Policy Expectations;
• A general retreat from risky assets, including Bitcoin.

This movement is accompanied by a rapid change in monetary expectations. Where investors had expected a rate cut, the scenario now points to a longer pause or even a tightening. In this climate, Bitcoin fell almost 4% during the day and broke the key psychological barrier below $66,000.

A weakened market structure for Bitcoin

Technically, Bitcoin’s momentum is deteriorating significantly. The break of important support levels created a market structure marked by falling tops, indicating a gradual weakening of buying pressure. Analysts now identify the $70,000 zone as a tough resistance to break, while the next support levels are between $65,000 and $64,000. This configuration supports the expectation of a continuation of the short-term correction.

Another signal is attracting the attention of observers: Bitcoin could see a sixth consecutive month of decline, which is rare since 2018. This trend reflects the gradual movement of capital in an environment where risky assets are losing appeal due to rising bond yields. The market appears to be entering a waiting phase dominated by caution and reduced exposure.

“Inflation expectations have deteriorated so much that the market is now behaving as if an emergency rate hike by the Fed is imminent,” added Adam Kobeissi, founder of Kobeissi.

In the long term, this sequence raises questions about Bitcoin’s ability to evolve independently of macroeconomic cycles. While some investors still see it as a hedge against inflation, recent reactions show it remains highly correlated with global liquidity conditions. Inflation developments and Federal Reserve decisions are expected to remain the main catalysts in the market in the coming weeks, where the slightest surprise can quickly reverse trends.

Luc Jose A.

A graduate of Sciences Po Toulouse and holder of the blockchain consultant certification issued by Alyra, I joined the Cointribune adventure in 2019. Convinced of the potential of blockchain to transform many sectors of the economy, I committed myself to raising awareness and informing the general public about this ever-evolving ecosystem. My goal is to enable everyone to better understand blockchain and take advantage of the opportunities it offers. I strive every day to provide an objective analysis of current events, decipher market trends, convey the latest technological innovations, and put into perspective the economic and social issues of this ongoing revolution.

DISCLAIMER OF LIABILITY

The views, thoughts and opinions expressed in this article are solely those of the author and should not be taken as investment advice. Before making any investment decision, do your own research.